FTX3044F 2015 Tutorial

Due: Week beginning 23 February

2015
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Question 1
Write a page discussion on the following topic: Who owns a company?
(5 marks)
Neatness (1)
Structured argument and not all over the place (1)
Answer depends (1)
Legalities:

Company owns itself (1)

Directors under no obligation to pursue shareholders benefit; refer to
specific MOI of company

Practically:

Shareholders vote on election of directors and directors might feel obligated

Shareholders have residual claims

Question 2
What is the vision of Woolworths Limited? Does the vision describe the core business of
Woolworths Limited adequately?
The vision statement of Woolworths is to be a world leader in retail brands that appeal to
people who care about quality, innovation and sustainability. The vision statement
adequately describes Woolworths core business except that it does not specify which
retail areas Woolworths is active in: food, clothes and credit. What I like about the
statement is that is focuses on company reputation and implies fair treatment of
customers. A retail business is about the customer.
Describe and explain the three most important competitive advantages of Woolworths
Limited?
Operations gaining competitive advantage by delivering world-class operational
efficiencies in a sustainable manner
Fashion leader Our ability to lead the market in fabric and product innovation
is a key competitive advantage + We continue to actively support the local clothing
industry in our supply chain development initiatives, and have been focusing on speed to
market as an important competitive advantage
African growth to establish a presence in those Africa markets where we see the longerterm opportunity to have a substantial business and where early entry is deemed
to be a competitive advantage
Social and environmental impact The Good Business Journey offers a strong
competitive advantage for the group
What accounting ratios would you use to analyze Woolworths past performance with
respect to those three competitive advantages and why?
Gross profit % should reflect brand value and efficiencies.
Operational efficiencies should also reflect in working capital ratios.

Consider direct measures of operational efficiency such as supply chain throughput speed
etc.
Measure speed to market in ratios such as number of new items in range and stock
writedowns.
Africa growth growth measurements for African stores and economies.
Question 3
Define the following concepts:

(5 x 2 marks)

Derivative A financial instrument that derives its value from movements in another
financial asset like a share.
Stock market index a summary measure that conveys information on a group of shares.
Efficient market a market where share prices incorporate all information is efficient.
PIC Public Investment Corporation; the government asset manager.
ADR American depository receipt is a negotiable security that represents securities of a
non-US company that trades in the US financial markets.
Total: 24 marks

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